The U.S. private sector added 118,000 jobs in November, ADP Employer Services reported on Wednesday, mainly in the service sector. This number missed expectations ahead of Friday's closely watched government employment report.
The New Jersey-based ADP said the service sector created 114,000 new positions, while goods-producing businesses accounted for the balance of 4,000 jobs. Gains in construction jobs of 23,000 more than offset the 16,000 decline in manufacturing employment. Also, October’s total was revised down 1,000 to 157,000.
Payroll giant ADP recently expanded and changed the formulation of its monthly employment data after several months of questions about the figure's accuracy. While economists say they are looking for the ADP print to come in at 125,000 for November, after an October print of 158,000, they also point to the limitation in their forecast given the limited history of forecasting to judge the accuracy of the revamped ADP Employment Report.
“Superstorm Sandy wreaked havoc on the job market in November, slicing an estimated 86,000 jobs from payrolls. The manufacturing, retailing, leisure and hospitality, and temporary help industries were hit particularly hard by the storm,” Mark Zandi, chief economist of Moody’s Analytics, said in a statement. “Abstracting from the storm, the job market turned in a good performance during the month.”
Markets look to ADP's report on private-sector payrolls to provide some guidance on the U.S. Labor Department's jobs estimate, which will be released Friday and includes information on both private- and public-sector payrolls.
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The lingering effects of Superstorm Sandy mean that nonfarm payrolls probably rose in net terms by just 93,000 in November, much less than October’s 171,000 gain. Initial claims readings have shown sizable storm effects into the BLS employment report's survey week, though loss of work should be offset somewhat by reconstruction efforts. The fiscal cliff could have prompted some businesses to hold off hiring until the New Year too. The unemployment rate is expected to hold steady at 7.9 percent in November.